Business, the GOP, and the Debt Ceiling

A sprawling coalition of Wall Street and Main Street business leaders sent an unmistakable message to lawmakers Tuesday: Enough squabbling. Get the debt ceiling raised.

The message, sent in a letter to President Obama and every member of Congress, puts pressure on GOP lawmakers, who have staked out an uncompromising stance against raising taxes in the partisan wrangling over the country’s borrowing limit.

[…]

The letter, signed by hundreds of senior company executives and groups including the U.S. Chamber of Commerce and the Business Roundtable, said that “it is critical that the U.S. government not default in any way” and urges lawmakers “to put aside partisan differences and act in the nation’s best interest.”

The reason that I put the GOP in the title of this post is because while the letter above is addressed to Congress and the President, the collective actor of most significance (and the reason we are at an impasse) is the Republican caucus in the House. Further, interest groups like the Chamber of Commerce and the Business Roundtable are traditional GOP allies.

What this underscores yet again is that most people who understand the situation also understand that the debt ceiling has to be raised. The only people who seem not to understand this are a faction of ideologues in the GOP, a gaggle of talk show hosts, and a smattering of bloggers and blog commenters. I have not seen a serious economist (regardless of philosophical predilections) or really anyone I would consider serious/informed about this topic who thinks otherwise. I suppose it is possible that commenters can conjure an outlier, but I have my doubts (not to mention likely disagreements over what constitutes serious and/or informed, I suppose).

I find all of this interesting as well because it seems to speak to a serious internal identity crisis within the GOP at the moment. The Republicans are allegedly the party of business, yet they have created uncertainty in the economy over their game of chicken and have now forced some of their allies to speak publically. Again: yes the letter is addressed to multiple actors, but the message is for the Republicans.

About Steven L. TaylorSteven L. Taylor is Professor of Political Science and Dean of the College of Arts and Sciences at Troy University. His main areas of expertise include parties, elections, and the institutional design of democracies. His most recent book is the co-authored A Different Democracy: American Government in a 31-Country Perspective. He earned his Ph.D. from the University of Texas and his BA from the University of California, Irvine. He has been blogging since 2003 (originally at the now defunct Poliblog).
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This is actually getting to be fun to watch.
McConnell obviously got the message from Wall Street and has crafted a way out that achieves nothing policy wise, but offers an opportunity to score political points.
His caucus in the meantime has doubled-down on crazy and is demanding a balanced budget amendment. Now a balanced budget amendment is never ever going to happen. Even if you overcame the struggle to pass it – which you can’t – you would have to slash spending from something like $3.77T to $2.15T (those are Heritage Foundation numbers and so cannot be trusted). It would decimate the world economy. It would make the Great Depression look like just another bad day.
And all the while Cantor is doing everything he can to make Boehner look bad, and I assume make a bid for his job.
Boehner and McConnell sure were happy to embrace the Tea Stain last November. Wonder what they think today?

The lack of clarity in the public understanding of this matter I blame entirely on President Obama. He has the bully pulpit and has used it to embrace conservative themes that support the idiots in the GOP who want to put the government in default.

I am disgusted with the entire political establishment in Washington but reserve a special measure of disgust for Obama as the weakest president ever to hold the office.

Dr. Taylor, I don’t think anyone is seriously advocating not raising the debt limit to create a crisis. I think a number of people are seriously saying it is time to stop kicking the can down the road and address the systemic problems that are creating this ruious debt load. I realize that subtle distiction is too hard much of the progressive left to appreciate, but then I never really thought of you as the progressive left. Alex, sure, but not you.

I think a number of people are seriously saying it is time to stop kicking the can down the road and address the systemic problems that are creating this ruious debt load. I realize that subtle distiction is too hard much of the progressive left to appreciate

Oh yes, it is a dreadfully subtle position.

The problem is: if dealing with a ruinous debt load is the goal, then why is even discussing revenue increases off the table? I cannot take seriously the notion that the debt is such a major problem that it HAS to be dealt with, and quickly, if those claiming the end is nigh can’t even discuss ending tax subsidies or the like.

Dr. Taylor, it would be painful but it could be done. Unfortunately, Obama seems to be offering promises of cuts for real tax increases and we’ve been down this path before too often to trust him on it. As for politicans being disningenuous, well, yeah. That’s what they do. Sounds like an argument for smaller government to me.

Just to be clear, my position is that we have a spending problem, not a revenue problem. Raising the debt limit will happen now because there really is no upside to not doing it unless one truly believes we have to destroy the country in order to save it. No doubt there are some you can find who will say that, but not me.At the same time, raising the debt limit just to kick the can down the road does nothing but dig the hole a little deeper. Whatever happened to elections having consequences? Obama and his party didn’t win the last election and yet they are acting as though they did. I’m honestly not seeing much compromise coming out of the Democrats at this point. Please correct me if I’m wrong. It seems from my humble perch that they are happily bouncing along playing this game of chicken as well hoping the Rpeublicans can be blamed for whatever michief results. They could easily accept some cuts now and then wait for the next election, could they not?

As to the pretense of subtlety, well, it is hard to keep up with the subtlety of “Turtle Face”, “Do you hear any of them advising sanity? Me neither.”, “doubled-down on crazy”, “happy to embrace the Tea Stain”, and “the idiots in the GOP”. But give it time, that’s only in the first four comments, so I’m sure the rational, reasoned commentary will be forthcoming soon enough.

my position is that we have a spending problem, not a revenue problem.

Yes, I am aware. However, I consider that a slogan more than anything else. It does not address the actual cost of things like defense and Medicare. Nor does it address the fact that every serious inquiry into the question of what do about the long-term fiscal situation stresses the need to deal with both spending and revenue.

“…Whatever happened to elections having consequences? Obama and his party didn’t win the last election and yet they are acting as though they did….”
You are aware that Obama and his party do in fact still control the White House and one half of the Congress right? Did you think one mid-term off-year election nullifies everything that has happened before that?
I have to say that the logic of historically low tax rates not being a revenue problem, in relation to a large amount of debt, escapes me. I mean – we have a large debt. We spend a lot of money. And we take in comparatively little – the least since the 50’s. To me that’s a two-fold problem. You like to analogize the government to an individual…and while that’s not actually an appropriate analogy…I will say that given a large amount of debt I would cut my spending habits and try to increase my income in some way. Now, predictably, the analogy falls apart because increasing revenue for the government can indeed have negative effects. But there is zero evidence that the type and level of revenue increases being discussed would have anything but a positive effect – especially after 2013 when these are intended to take effect.
I realize that “….we have a spending problem, not a revenue problem…’ makes a very nice talking point and a wonderful bumper sticker. But repeating the party line verbatim over and over again doesn’t make it so.

Dr. Taylor, I guess that puts me in something of a No True Scotman bind unless I agree that we must address revenue and spending.

I could abide some higher taxes, but not without some serious cuts to our bloated government and a partial abandonment of the various wealth redistribution schemes now in place, and it takes more than promises of these for me to sign on to higher taxes. As you have noted discussions of appropriate levels of spending and revenue and distinct from the deficit and debt discussions, though they are necessarily related. I don’t accept the current or proposed new levels of federal spending as the new normal and look forward to a reversing of the nanny state european trends that have been developing and expanding regardless of the many failures of progressive programs for the last 70 years. I know that makes me something of a crazy voice wailing madly from the wilderness. I can live with that.

hey norm, I’m looking for any compromise not capitulation. Try not to be an ass about it. Ok? Are you capable of that?

We spend too much money, I think I’ve been clear about that. When times are good we do not save for bad times like these but take it as an opportunity to spend even more, which is why the arguments about spending more because times are bad carry so little weight with me now. Well, that and the fact that I still believe in the concept of limited government with enumerated powers. Go ahead and let me know what economic powers you think the government doesn’t have. I’ll wait.

Ah yes, the lowest taxes since the 50’s is lying with statistics. It is true only in he narrow realtyive statistic of tax revenue against GDP and is only true because unemployment has stayed so high for so long, despite all the Keynesian stimulus. I don’t accept that it is the government’s job to run the economy and my life. You apparently do. Good for you. You’re getting what you want.

And what party is it that you think I am part of? I am a registered independent and have been all my life. Republicans have their own gangs they tend to support and feed when they are in power just like Democrats, so I have no particular love for them. I do tend to find them closer to my beliefs than Democrats, but not close enough. Once again, the nuance of there being a lot of choices to your right seems hard to grasp. Oh well.

@charles austin: If elections have consequences, and those who win should be followed, why weren’t you out cheerleading for Obama and the Democrats between 2008 and 2010? Could it be because you only think elections should have consequences when your team wins?

If the debt ceiling doesn’t get raised, then when the consequences of not raising the ceiling make themselves felt (i.e. big cuts in programs with large, influential constituencies) , expect a lot of finger-pointing and blame-gaming and the ceiling will then get raised. Politically, the alternatives are too dire. If you believe that there are enough people in Congress willing to “do the right thing” instead of what will get them re-elected, then good for you!

So, the debt ceiling is going to get raised. Republicans can pretend otherwise until political reality interferes, play a pure political game with an eye to 2012 (e.g. the McConnell proposal), or try to wring as much out of the Democrats and Obama as possible in return for raising it. Just don’t expect that the Democrats will make concessions without expecting something in return. If the Democrats are expected to p*ss off their constituencies, Republicans will be asked to do the same. And, Republicans should demand as much as possible when Democrats ask them for large concessions. That may seem tawdry and not up to the “do the right thing” standard, but laws, sausages, etc. Or, as Alinsky would put it, “It is futile to demand that men do the right thing for the right reason.”

Oh, but they do…when the GOP takes the White House and both houses of Congress, then Republicans can do more of what they want, that is, if they can find some way around the filibuster that they have used so often in the Senate…

As to the pretense of subtlety, well, it is hard to keep up with the subtlety of “Turtle Face”, “Do you hear any of them advising sanity? Me neither.”, “doubled-down on crazy”, “happy to embrace the Tea Stain”, and “the idiots in the GOP”.

Offended by all of that, are you? I suppose you always refer to the President and the Democrats in a respectful way?

hey norm, I’m looking for any compromise not capitulation.

Ahh, but any compromise will involve tax increases of some kind…as long as hardliners think of any tax increases as “capitulation” than no compromise will be possible…

partial abandonment of the various wealth redistribution schemes now in place,

Cool, let Bachmann stop taking subsidies, and GOP members of Congress opt-out of their platinum health care plans and retirement packages that basically leave them set for life after serving for two years.

@David M:
I believe in a previous post Charles mentioned eliminating Social Security and Medicare.

Of course, deleting SS would also delete the $1Trillion of revenue it takes in, while deleting the $1Trillion it pays out- so I am not clear on what that would accomplish other than leaving us with about $1.2 Trillion in total revenue.
Deleting Medicare would cut about $700 Billion, leaving a total budget of about $2.1 Trillion in spending with $1Trillion in revenue, leaving a budget deficit of around $1.1 Trillion roughly speaking.